Term insurance: Women’s choice

The affordable price of term insurance is one of its key features, says regional vice president of sales for southern Alberta, Northwest Territories and the Yukon at Canada Protection Plan (CPP), Chantal Mackenzie. It’s a position discussed in the June 2023 edition of the Insurance Journal. 

In an interview with the Insurance Portal, Mackenzie states that “life insurance is not as expensive as one might think, especially for women,” she adds.

“On average and all other things being equal, women pay less for life insurance. Depending on your specific insurance policy and your health history, you may pay less than what your husband or common-law partner pays for similar coverage.”. 

Mackenzie explains that men’s life expectancy is lower than women’s and they will therefore have to pay more to get insured because insurers expect to have to pay out the insurance amount to their beneficiaries sooner. According to the vice president, this price difference between men and women is more pronounced in term insurance than in permanent insurance. 

Due to its lower price, term insurance tends to be the preferred coverage of women and young families. Present in this niche with term insurance products, insurtech firm Emma found that 72 per cent of Emma life insurance policies purchased to date were bought by women. 

This product acts as a powerful business development tool for advisors who want to develop these niches. As these clients become wealthier, they may eventually transform their term insurance into a permanent product. 

Women are depriving themselves 

In the Insurance Journal’s report, entitled Term insurance remains essential despite a decline in sales, Mackenzie points out that fewer women have insurance than men. Women are more stressed than men about household finances she says, particularly in this period of sustained inflation and high interest rates. 

In conversation with the Insurance Portal, she adds that these financial factors can push many women to make sacrifices for the benefit of the household. “These financial concerns can deter women from making decisions in favor of their long-term financial security, such as saving for retirement or buying the life insurance coverage they need,” Mackenzie says. 

Unawareness of costs 

She also thinks people underestimate the costs that a woman’s death can bring to a family. “Families may not realize what it costs to lose the primary caregiver,” she argues. 

Mackenzie estimates that a significant financial gap could need to be filled, such as the need for additional childcare costs or domestic support. “Furthermore, women are often the main breadwinners,” she says. 

She says there remains a persistent belief that can lead to families underestimating the true contribution of a stay-at-home parent: That is the idea that only the income provider should have a life insurance policy. 

She also believes that when buying a first home or expecting a first child, it can be easier to see how the loss of income from one spouse can financially devastate the family. 

Required flexibility 

Flexibility weighs particularly heavily in women’s choice to purchase a term life insurance product, Mackenzie adds. “A woman can take out a smaller term insurance policy when she is young and single because she will have the flexibility to convert it into a permanent product when certain important life events occur, such as starting a family or buying a house,” she points out. 

She adds that women are increasingly becoming the owners of small and medium-sized businesses following the pandemic, as well. “They may wish to take advantage of the financial tools offered by certain life insurance products.” 

Specific biology 

According to Mackenzie, “women (also) face distinct biological risk factors, such as breast and ovarian cancers.”

She notes that women are exposed to the increased risk of various health problems at different times in their lives. “Women need products (like critical illness protection or term insurance) that will cover them so they can focus on their recovery,” she concludes.